S&P May Raise Ratings on Deutsche Bank, Three Other German Banks

S&P Global Ratings said it may raise credit ratings on four of Germany’s largest banks because they will probably be able to maintain sufficient buffers to protect senior bondholders from losses should they fail.

“We might raise our long-term issuer credit ratings and long-term issue ratings on the senior unsecured debt” of Deutsche Bank AG, Commerzbank AG , the German unit of UniCredit SpA and Deutsche Pfandbriefbank AG, S&P said in a statement.

Regulators are pushing lenders to hold more equity and sell subordinated bonds to avoid a repeat of the taxpayer-funded rescues that followed the 2008 credit crunch. In the European Union, countries have taken different approaches to subordination, leading the bloc’s regulatory arm to propose a new kind of senior debt that can be converted to equity or written down to create legal certainty for investors and resolution authorities.

The long-term issuer credit rating “is the most relevant one for virtually all of our clients,” John Andrews, head of Deutsche Bank’s investor relations department, said in e-mailed comments.

S&P said it may lower ratings on nine other German banks’ senior unsecured debt instruments. “We believe they could become subordinated, while senior creditors are unlikely to benefit from additional buffers of subordinated instruments,” the ratings company said.

S&P plans to conclude its assessment in the first quarter.

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